Previous post in this series: Are We Solving the Right Financial Problem?
Last week, I wrote about Rory Sutherland’s example of a car speedometer. Showing the time needed to travel ten miles, rather than simply displaying miles per hour, revealed how little time is saved by driving faster once we are already travelling at speed.
I make no apologies for returning to Sutherland this week. Another of his examples gave me food for thought, although this time we are leaving the car behind and boarding a train.
Discussing HS2, Sutherland questioned the emphasis placed on reducing journey times. Speed is easy to measure and straightforward to place in a business case. But is making the train faster necessarily the best way to improve the experience for the person sitting on it?
What if instead of the incredible amount spent building HS2, funds were used to improve the journey itself through upgraded comfortable surroundings, reliable Wi-Fi and a service that allowed passengers to use their time productively or enjoyably?
None of that would make the train arrive sooner. It might, however, make passengers considerably less concerned about how long it takes.
Last week’s example asked whether we were measuring speed helpfully. This one asks something more fundamental: is speed really the thing we should be trying to improve?
The destination receives most of the attention
Financial planning naturally concentrates on outcomes.
How much might your investments be worth? What income could your pension provide? When might you be able to retire? How much tax could be saved?
These are important questions. But they are all concerned with the destination. They tell us relatively little about the experience of getting there.
For many people, that experience involves pensions accumulated with multiple employers, Investments held on different platforms, paperwork arriving at different times and financial language that appears designed to make perfectly intelligent people question themselves.
The eventual outcome might be satisfactory. The journey can still be unnecessarily difficult.
The hidden cost of financial friction
Small inconveniences rarely look serious in isolation. Another form to complete. Another password to remember. Another letter containing three pages of information and no obvious explanation of what, if anything, you are expected to do.
Collectively, these create what behavioural economists sometimes call friction: anything that makes an action more difficult, confusing or time-consuming than it needs to be. Friction matters because people have limited time and attention. When something feels complicated, we are more likely to postpone it. The task remains on the list, quietly gathering guilt but very little momentum.
That can explain why pensions remain scattered, nominations of beneficiaries become outdated and important financial decisions are repeatedly left for a quieter week that never seems to arrive. The problem is not necessarily a lack of interest or discipline. Sometimes the journey has simply acquired too many changes, delays and replacement bus services.
Simplicity has financial value
Making financial affairs simpler does not always generate an impressive headline figure. Yet it can still create real value.
Having a clear view of what you own makes it easier to see whether everything is working towards the same objectives. Reducing unnecessary complexity can make administration easier for you and, eventually, for anyone who may need to help manage your affairs.
Clear arrangements can also improve decisions. If someone understands where their income comes from, what their different accounts are for and which parts of their wealth are intended for later life, they are less likely to make choices based on a single statement or alarming headline.
This does not mean everything should automatically be combined or moved. Existing pensions and investments may contain valuable guarantees, benefits or terms that could be lost. Simplicity is useful, but not when achieved by casually discarding something important.
The aim is not to have fewer accounts at any cost. It is to ensure that every part of the plan has a purpose and that unnecessary complexity is not being mistaken for sophistication.
A good review should improve the journey
The value of a financial review is sometimes judged by whether it produces a change.
Was an investment switched? Was more money contributed? Was a new product arranged? But a useful review does not always need to end with financial furniture being moved around. It might confirm that the existing approach remains suitable. It might replace uncertainty with a clearer understanding of what the plan is designed to achieve. It might identify one piece of administration that has been ignored for years or give someone the confidence to make a decision they have been circling for months.
Nothing dramatic may happen. No ribbon needs to be cut. Yet the person leaves with a clearer view of where they are going and what happens next.
That is an improvement, even if it is difficult to express as a percentage.
Making the numbers serve the person
The lesson from HS2 is not that speed has no value. Sometimes arriving sooner matters enormously. The point is that a measurable improvement is not automatically the improvement that matters most to the person making the journey.
Financial planning deserves the same test. Returns, costs and tax efficiency matter, but they should not become the sole definition of progress. The better question is whether the plan is making life clearer, decisions easier and the future feel more manageable.
A good financial plan should therefore do more than produce projections. It should help you understand what you have, why it is arranged that way and what happens next. The numbers remain important, but they are there to support better decisions rather than make the plan appear more sophisticated.
That is why questions matter. If part of your plan feels unnecessarily complicated or you cannot see how it relates to the life you want to lead, please ask us to explain it differently. The purpose of financial planning is not simply to present you with an answer, but to help you feel comfortable with the journey it asks you to take.
Clarity is not simply about receiving information. It is about feeling confident enough to question it. If anything within your own financial plan feels unclear, please speak to us.
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